Good riddance, MotoNovo. If redress is too much for you, the door is that way

FirstRand, trading as MotoNovo, is quitting the UK motor finance market and, incredibly, wants to leave with a lecture about how the FCA’s redress scheme is “deeply flawed” and goes too far.

The sheer nerve.

This is a lender walking away from a market tainted by hidden commissions, conflicted sales and widespread consumer harm, while pretending the real outrage is being asked to put some of that right. MotoNovo isn’t an innocent bystander getting caught up due to the rest of the industry, it stands front and centre. To it though, having to compensate UK consumers is the real scandal.

That tells you everything.

Let’s be honest about what is happening here. This is not a principled stand. It is not brave corporate leadership. It is not concern for fairness or balance. It is a full on sulk. A corporate tantrum. A lender throwing its toys out of the pram because the gravy train has finally hit the buffers.

And even now, the industry is still being handled with kid gloves.

The FCA redress scheme has already been watered down to protect lenders from the full consequences of their own behaviour. Consumers, in the main, will not receive all of the money they have been overcharged. They are looking at a scheme that has already been softened, narrowed and made more comfortable for the very firms that created this mess in the first place.

And MotoNovo still says that goes too far.

Too far?

What went too far was a motor finance market built on concealment, distorted incentives and commission arrangements that should never have been allowed to flourish for as long as they did as a result of an incompetent regulator. What went too far was consumers being left in the dark while lenders, brokers and dealerships enriched themselves behind a curtain of opacity. What went too far was an industry that behaved as though disclosure was optional and accountability was for somebody else.

That is what went too far.

The Supreme Court has made plain that the issues at the heart of this scandal were far more serious than lenders would now like to admit. This was not simply a case of things being a little untidy or slightly unfair around the edges. The legal and regulatory problems ran much deeper than that. And for firms like MotoNovo, that is the real source of the outrage. Not that the scheme is unfair, but that the game is finally up.

That is why this exit deserves no tears.

MotoNovo was perfectly content while the money was pouring in. There were no anguished warnings then about imbalance or injustice. No grand speeches about flawed systems. No concern for consumers being steered into finance agreements without proper transparency over who was being paid, how much, and why. The moral panic only begins when lenders are told they may have to hand some of it back.

How convenient.

So spare us the theatrics, and the wounded-corporate routine. Spare us the suggestion that this is some noble departure from an overregulated market. If a lender cannot stomach operating in a market where consumers must be treated fairly, commissions properly disclosed, and redress paid when wrongdoing is exposed, then it has no business being in that market at all.

In fact, if more lenders feel the same way, perhaps they should follow MotoNovo out of the door.

The UK motor finance sector has been clogged for too long with firms that saw compliance as a nuisance, transparency as a threat, and customers as revenue streams to be mined. If the clean-up of this market makes some of these lenders decide they would rather quit than behave properly, that is not a tragedy.

And there is something darkly funny about all this.

For years, consumers were expected to just accept the secrecy, the conflicts and the carefully engineered ignorance. But now, the moment lenders are told they may finally be held accountable, they stamp their feet and cry that the system is unfair.

Unfair to whom?

Certainly not to the consumers who were left in the dark.

Before you go, leave enough cash behind

And before MotoNovo disappears through the exit, there is one more thing.

Please make sure you leave enough cash behind to deal with the compensation bill for GAP insurance as well.

Because while MotoNovo is busy complaining about paying redress in one scandal, another is edging further into view. We are now starting to see Financial Ombudsman Service GAP insurance decisions being issued, and going against MotoNovo.

Grotesque, undisclosed GAP insurance commissions, unsuitable products and missing documentation. We’ve seen this pattern before.

So by all means leave the market. Few will mourn the loss. But do not imagine that walking away wipes the slate clean. Consumers still have to be compensated. Redress still has to be paid.

The truth is brutally simple. MotoNovo is not flouncing out because the FCA has gone too far. It is flouncing out because even a watered-down version of accountability is still too much for some firms that became far too comfortable in a market built on unfairness.

Off you pop.

Let us hope whoever replaces MotoNovo brings something this sector has lacked for decades… honesty, decency, transparency and a basic sense of morality.

And if a few more lenders are equally offended by the idea of compensating the people they helped exploit, they know where the door is too.